Physical Music Sales to Decline by 9% in the US This Year

August 16, 2012

This article is included in these additional categories:

Europe & Middle East | Financial Services | Media & Entertainment | Mobile Phone | Retail & E-Commerce | Uncategorized

strategyanalytics-change-in-music-revenues-by-type-2012v2011-aug2012.pngWhile online and mobile music revenues are expected to show strong growth rates in both the US and globally this year, physical music sales are projected to be down by 9% in the US, and 12% globally, per a Strategy Analytics forecast released in August 2012. In the US, mobile music revenues will grow most rapidly, at 39%, followed by online (PC/laptop/tablet) revenues, at 10%. The expected growth in mobile music revenues in the US comes amidst recent reports from comScore indicating that 27.6% of the total US mobile subscriber audience listened to music on their device in the 3-month period ending in June 2012, up from 18% in the 3-month period ending in April 2011.

Physical Sales Decline Slowest In US

With a projected decline of 9%, the negative growth rate for physical sales is smallest in the US. By contrast, physical sales are expected to decrease by 30% in the UK, and by 15% in Western Europe. Globally, packaged music sales will decline by 12%.

All told, packaged music sales will still comprise 61% of global spending, and downloads will still account for about 80% of digital music revenues. Indeed, according to a Lab42 survey of 500 music listeners released in August 2012, 70% have paid to download music.

In the US, physical spending is expected to be overtaken by digital this year, though a January report from Nielsen Soundscan indicates that digital music sales already surpassed physical music sales in 2011, accounting for 50.3% of total music sales.

Meanwhile, per the Strategy Analytics forecast, on a global basis, digital revenues are not expected to overtake physical spending until 2015.

Streaming to Pace Online Growth

US streaming music revenues in 2012 will grow by 27.8%, roughly 4 times the growth expected for downloads (6.7%). Globally, online streaming revenues will grow at nearly 5 times the rate of growth for download revenues in 2012, at 40% (to $1.1 billion) versus 8.5% (to $3.9 billion). Therefore, although downloads will far exceed digital for overall revenue, streaming will lead as the music industry’s “growth engine,” generating an additional $311 million in revenues, compared to $303 million for downloads.

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